Starting as a sole trader? The first ten things to do, in order
Naira Digital Growth · 31 October 2026
Name it and check the name, register with HMRC, open a bank account, start your records, insure the risk, write your terms, get a domain and a business email, claim your Google listing, get a simple website live, and put the tax dates in your calendar. In that order. Most of it can be done in a day.
In Part 1 you answered three questions and landed on sole trader. Good. This is what to do next, in the order we would do it again, having done it once in the wrong order ourselves. None of it is hard. Doing it in the wrong order is what costs time.
1. Pick the name and check it
As a sole trader you can trade under your own name or a business name. A business name cannot include “Limited”, “Ltd”, “LLP” or “plc”, cannot be offensive, cannot be the same as or too similar to someone else's trade mark, and cannot use words that suggest a link to government or a council, or other “sensitive” words, without permission. Before you print anything, check four places. The trade mark register at the Intellectual Property Office, which is the legal one. Companies House, not because the law requires it but because trading under a name a registered company already uses invites a complaint, and you will want the Ltd version free if you incorporate later. The domain name, because a business whose web address does not match its name confuses everyone. And the social handles you will want. If the domain is taken, change the name now rather than later. Your own name and your business name both go on invoices, letters and your website, with an address where legal documents can be sent.
2. Register with HMRC
You register for Self Assessment as a sole trader. It is free and done online. The deadline is 5 October after the end of the tax year you started in, so a business started in November 2026 has until 5 October 2027, but do it now while you remember. Miss it and HMRC gives you three months from its letter to file, the January payment date does not move, and a penalty is possible. You will get a Unique Taxpayer Reference by post about two weeks later, and a Government Gateway or GOV.UK One Login sign-in. Keep both somewhere safe, you will need them every year. If your gross income from the business, before expenses, is under £1,000 in a tax year and you have no other reason to file a return, you do not have to register. That figure is due to rise to £3,000 from April 2027, announced in the October 2026 Budget and still to pass into law.
3. Open a separate bank account
Not a legal requirement for a sole trader, but the single thing that makes everything after this easier. Check your bank's terms first, because some personal accounts do not allow business use. A free business account from one of the app banks is fine to start. Run every business payment in and out through it and nothing else.
4. Start your records on day one
A spreadsheet with money in, money out, date and what it was for, plus a folder of receipts, is enough at the start. Keep records of your personal income too, your tax return asks for both. Photograph paper receipts the day you get them. You must keep the lot for at least five years after the 31 January filing deadline for that year. If you prefer software, pick one that HMRC recognises for Making Tax Digital, because that is coming to sole traders in stages. The test is your gross self-employment and rental income combined, as shown on your previous tax return. Over £50,000 joined in April 2026, over £30,000 join in April 2027 and over £20,000 in April 2028. A new business is not caught until a return shows income over the line, so you have time, but starting on software now means never moving.
5. Insure the risk
Public liability insurance is not a general legal requirement, but some trades, licences and client contracts require it and most customers expect it. If you give advice for a living, professional indemnity cover is the one that matters, and for solicitors, architects and some other regulated professions it is compulsory. If you take on staff, employer's liability insurance is required by law, with at least £5 million of cover, and the fine for not having it is up to £2,500 a day. The main exemption is a business that employs only close family, and that exemption is lost if you incorporate. Tools, stock and a vehicle used for work usually need telling the insurer too.
6. Write your terms before your first quote
One page. What you do, what it costs, when you are paid, what happens if they cancel, who owns the work. A deposit for anything that takes more than a few days. Then a quote template and an invoice template. An invoice has to show a unique invoice number, your name and business name, your address and contact details, an address where legal documents can be sent if you use a business name, the customer's name and address, a clear description of what you supplied, the date you supplied it, the date of the invoice, the amounts and the total. If you are not VAT registered, and at the start most people are not unless they choose to be, do not put VAT on it.
7. Register the domain and set up a business email
A domain costs around ten pounds a year. An email address on it costs a few pounds a month and it is the thing that separates a business from a hobby in the first email a customer gets from you. Do not run the business from a Gmail or Hotmail address. The domain also claims your name online before anyone else does.
8. Claim your Google Business Profile
Free, and for a local business it is the listing that brings the first phone calls. If you work from home, Google's own rules say to set it up as a service-area business with the address hidden. We wrote a separate guide on exactly how to do that, read it before you fill the form in, because getting it wrong can get the profile suspended. Ask your first happy customers for a review there. In our experience five real reviews do more than any advert in year one.
9. Get a simple website live
Not a big one. One page that says who you are, what you do, where you do it and how to get in touch, with your phone number as a tap-to-call link and your Business Profile linked to it. Done well it costs a few hundred pounds and it is the thing a customer checks after a recommendation. It is also what we do, so take that for what it is worth. Our Launch package is £750 and includes the first twelve months of hosting.
10. Put the dates in your calendar now
31 January, the online Self Assessment return and payment for the tax year that ended the previous April. 31 July, a second payment on account, which applies once your bill is £1,000 or more and most of it was not collected through PAYE. 5 October, the registration deadline if you have not done step 2. The £90,000 VAT threshold, measured over a rolling twelve months, or sooner if you expect to pass it in the next thirty days, so watch it as you grow rather than at year end. And your insurance renewal. Set each one a month early, so the date never arrives as a surprise.
Quick questions
Do I need an accountant to start? No. Most sole traders do the first year themselves and get one when the numbers or the time justify it. Tidy records make that cheaper when it comes.
Can I claim what I bought before I started? Usually yes. Running costs paid in the seven years before you started, and equipment bought for the business, are treated as if paid on your first day of trading, provided they were for the business and you have the receipts.
What about tax in year one? You pay nothing until the January after your first tax year ends. Then you pay the whole year's bill, and if that bill is £1,000 or more, half as much again as a payment on account towards the next year. As a rule of thumb put a third of what you earn aside from the start and it is never a shock.
I am setting up a limited company instead. Most of the ten still apply, with different rules on the name, which must end in Limited or Ltd and cannot match a registered company, and on invoices, which must carry the full company name. Step 2 becomes forming the company at Companies House, £100 online, with every director and every person with significant control, usually anyone with more than 25% of the shares or votes, verifying their identity. The dates change too. The first accounts are due 21 months after incorporation and nine months after each year end from then on, corporation tax is paid nine months and a day after the end of the accounting period with the return due at twelve months, and a confirmation statement is filed at least every twelve months for £50.
This is general information, not tax or legal advice. Check your own situation on gov.uk or with an accountant.
Next in the series
Your first ten customers, and how to ask for the review.
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